What types of cases can be brought against investment advisers?
- The most common are claims involving churning, unauthorized investments, or investments that are unsuitable for the investor.
- Churning involves excessive trading to generate commissions for the broker rather than profits for the investor.
- Unauthorized investments involve investments where the professional has not gotten consent of the customer to execute the transaction before the investment advisor does so.
- The most common claim against an investment professional is what’s referred to as unsuitable trading.
- Suitability requires that an investment professional recommend investments that are suitable to the customer in two ways.
- They have to be suitable to the customer’s investment desires.
- They also have to be suitable for the customer’s objective investment needs.